[PDF] - 26/01/2016 HOLDINGS LIMITED Group Interim Results Presentation for PDF Document

SLIDE 1

26/01/2016 1

Group Interim Results Presentation for the six months ended 31 October 2015

HOLDINGS LIMITED

Financial review
Six months in review
Divisional overview
Infrastructure division
Consumer goods division
Conclusion

HOLDINGS LIMITED

Agenda

SLIDE 2

26/01/2016 2 Achievements Achievements

Successfully completed the 2nd Rights Offer - July 2015
Capital raised
R180 million
Number of shares in issue
620 158 235
Used R150 million to settle debt
Group corporate restructure completed
Group debt restructure completed

HOLDINGS LIMITED

New structure

HOLDINGS LIMITED Ellies Electronics (Pty) Ltd (Consumer business) Ellies Electronics (Pty) Ltd (Consumer business) Megatron SA (Pty) Ltd (Infrastructure business) Megatron SA (Pty) Ltd (Infrastructure business) Ellies Electronics Holdings (Pty) Ltd Ellies Electronics Holdings (Pty) Ltd

100% Ellies Properties (Pty) Ltd Ellies Properties (Pty) Ltd 100%

Debt levels:
Ellies Electronics – R200m overdraft facility
Ellies Properties – R53 million
R33 million – five year amortizing
R20 million – five year bullet
Megatron SA – R95 million, 5 year bullet

100% 100%

HOLDINGS LIMITED Megatron International Ltd (Mauritius) Megatron International Ltd (Mauritius)

100%

SLIDE 3

26/01/2016 3 Financial review

Discontinued operations – IFRS 5

Infrastructure segment
Scale down and shut down of the South African operations
Sale of the Telecoms business (November 2015)
Consumer goods and Property segment
Unbundling and separate listing delayed due to regulatory issues
Company to pursue as soon as possible

HOLDINGS LIMITED

Financial results

Revenue (DOWN 2.3%) R 989.1 million

Megatron Infrastructure continued UP 26.4% to R 205.1 million
Megatron Infrastructure discontinued DOWN 66.1% to R 46.9 million
Ellies Consumer and properties UP 3.3% to R 737.1 million

Operating profit / loss (UP 133.4%) R 10.4 million

Megatron Infrastructure continued UP 104.1% to a profit of R 0.6 million
Megatron Infrastructure discontinued DOWN 122.7% to a loss of R 23.1 million
Ellies consumer and Properties UP 876.1% to a profit of R 32.8 million

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26/01/2016 4 Financial results

Loss before taxation (IMPROVED 93.49%) R 3.8 million

Megatron Infrastructure continued
profit of R 0.3 million
Megatron Infrastructure discontinued
loss of R23.1 million
Ellies Consumer and Properties-profit of R19.0 million

Loss after taxation (IMPROVED 79.19%) R 8.9 million

Megatron Infrastructure continued
profit of R 0.9 million
Megatron Infrastructure discontinued
loss of R 23,0 million
Ellies Consumer and Properties
profit of R 13.1 million

Financial results

Headline (Loss) / Earnings Per Share

Cents per share At 31 October 2015 At 31 October 2014 At 30 April 2015 Total (1.02) (13.17) (81.34)

Infrastructure continued

0.03 (6.22) (60.22)

Infrastructure discontinued

(3.42) (2.46) (6.24)

Consumer and property discontinued

2.36 (4.50) (14.92) Number of shares At 31 October 2015 At 31 October 2014 At 30 April 2015 In issue at period end 620 158 235 303 505 691 453 057 398 Weighted average number of shares 583 633 462 303 505 691 354 135 067

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26/01/2016 5 Financial results

Value Per Share

Cents per share At 31 October 2015 At 31 October 2014 At 30 April 2015 Net Asset Value 166.75 327.81 190.76 Net Tangible Asset Value 130.03 258.90 140.70 Number of shares At 31 October 2015 At 31 October 2014 At 30 April 2015 In issue at period end 620 158 235 303 505 691 453 057 398 Weighted average number of shares 583 633 462 303 505 691 354 135 067

Statement of comprehensive income Infrastructure – continued operation

R’000 6 months 31 October 2015 6 months 31 October 2014 (Restated) 12 months 30 April 2015 (Restated) Revenue 205 112 160 910 201 315 Operating profit / (loss) 957 (15 890) (259 660) Profit / (loss) before taxation 648 (29 439) (286 277) Taxation 259 8219 35 067 Taxation rate (40%) 27.9% 12.2% Profit / (loss) for the period 907 (21 220) (251 210)

Discontinued operations losses – R 23,1 million
Continued operations:
Returned to profit
Improved liquidity as a result of capital raising

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26/01/2016 6

Statement of financial position - assets Infrastructure

R’000 At 31 October 2015 At 31 October 2014 At 30 April 2015 Non-current Assets 319 847 250 274 248 631 Property, plant and equipment 22 625 28 801 23 254 Goodwill and other intangible assets 173 041 207 859 173 407 Other financial assets 1 199 694 1 144 Trade and other receivables 35 196

Amounts due from contract customers

36 350

Deferred taxation

51 436 12 920 50 826 Current Assets 526 566 727 629 536 100 Total assets 846 413 977 903 834 248

Goodwill impairments at October 2014
Certain projects (R36.4 million) have been pushed out beyond 12 months
Project completed in October 2015 – payments due over 30 months:
Non-current portion R35,2 million
Current portion R25,5 million
In process of finalizing a discounting arrangement for these amounts

Statement of financial position - assets Infrastructure

R’000 At 31 October 2015 At 31 October 2014 At 30 April 2015 Non-current Assets 319 847 250 274 248 631 Current Assets 473 293 727 629 536 100 Inventories 5 510 100 950 15 824 Trade and other receivables 181 532 156 450 132 584 Amounts due from contract customers 264 925 435 172 348 615 Taxation receivable 162 29 266 29 267 Bank and cash balances 21 164 5 791 9 810 Assets held for disposal 53 273

49 517

Total assets 846 413 977 903 834 248

Tax refund received - R29 million
Comparison of bank overdraft and interest bearing debt – October 2014 vs October 2015:
Not comparable as circumstances were different due to restructuring
Assets held for disposal – represents the discontinued infrastructure assets

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26/01/2016 7

Statement of financial position - liabilities Infrastructure

R’000 At 31 October 2015 At 31 October 2014 At 30 April 2015

Non-current liabilities 100 771 19 035 96 210 Current liabilities 204 406 519 019 211 294 Interest bearing liabilities 164 240 711 210 Vendor loan payable 3 000 3 000 3 000 Shareholder loans payable 342

311

Trade and other payables 190 829 167 656 186 915 Amount due to contract customers 8 171 18 511 13 662 Provisions 1 314 1 414 7 116 Taxation payable 551 26 45 Shareholders dividends 35 35 35 Bank overdraft

87 666
Liabilities held for disposal

13 029

4 444

Total liabilities 318 206 538 054 311 948

Comparison of bank overdraft and interest bearing debt – October 2014 vs October 2015:
Not comparable as circumstances were different due to restructuring
Provision reversal is the utilisation of ‘Onerous provisions’ raised
Liabilities held for disposal – represents the discontinued infrastructure liabilities

Statement of comprehensive income - Consumer goods and Property

R’000 6 months 31 October 2015 6 months 31 October 2014 12 months 30 April 2015

Revenue 737 102 713 284 1 388 932 Operating profit / (loss) 32 807 (4 227) (50 293) Profit / (loss) before taxation 18 587 (18 847) (75 952) Taxation (5 362) 4 642 18 825 Taxation rate 28.8% 24.6% 24.8% Profit / (loss) for the period 13 225 (14 205) (57 127)

Revenue maintained in trying consumer environment
Slight improvement in margins
Overhead reduction - constantly under review
For the year ended 30 April 2015:
Stock impairments – R68 million
Sale of Eskom LED’s and other related product as cost or below cost in order to improve

liquidity

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26/01/2016 8

R’000 At 31 October 2015 At 31 October 2014 At 30 April 2015

Non-current Assets 204 262 224 219 207 094 Property, plant and equipment 137 519 150 604 142 061

Land and buildings

88 763 97 887 89 201

Other

48 756 52 717 52 860 Goodwill and other intangible assets 53 672 55 663 53 672 Investment in associate 10 712 11 271 10 011 Deferred taxation 2 359 6 681 1 350 Current assets 706 995 817 613 692 173 Inventories 493 062 584 457 467 080 Trade and other receivables 202 334 208 588 211 210 Taxation receivable 456 975 1 283 Bank and cash balances 11 143 23 593 12 600 Total assets 911 257 1 041 832 988 267

Statement of financial position- assets Consumer goods and Property

Land and buildings – still trying to unlock this value through sale
Inventory levels have improved relative to April 2015

Reduced inventory

Quantum lower as cost of goods approximately 20% higher due to exchange rate
New inventory items at October 2015:
DTT inventory and WIP – R18 million
Battery and invertors – R30 million
Reduced large amounts of older technology lighting
Lowered the amount of months stocking by managing supply chain better

R’000 At 31 October 2015 At 31 October 2014 At 30 April 2015 Inventories 493 062 584 457 467 080

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26/01/2016 9

R’000 At 31 October 2015 At 31 October 2014 At 30 April 2015

Non-current liabilities 50 441 3 952 48 946 Interest bearing liabilities 47 350 1 020 46 271 Other 3 091 2 932 2 675 Current liabilities 363 920 488 979 517 574 Interest bearing liabilities 6 419 140 184 154 796 Trade payables 185 835 295 577 230 673 Bank overdraft 162 852 50 732 128 818 Other 8 814 2 486 3 287 Total Liabilities 414 361 492 931 566 520

Statement of financial position- liabilities Consumer goods and Property

Reduction is trade payables vs Increase in bank overdraft – timing issue
Interest bearing debt – majority long term with debt restructure
Comparison of bank overdraft and interest bearing debt – October 2014 vs October 2015:
Not comparable as circumstances were different due to restructuring

SLIDE 10

26/01/2016 10 Contributors for the period

Zuikerbosch water treatment works
Metolong water treatment works
Ndola Lime recapitalisation project
Energy efficiency
Co-Generation solar and generator supply
Renewable

Contributors for the period

Metolong Water Treatment Works (in progress) Lesotho, sponsored by the United States Millennium Challenge Fund. A Joint Venture with Botjheng partnered with CMC Italy. Design Build Project. Construction of a 75ML/day water treatment plant and ancillary facilities Botjheng Water awarded supply of mechanical equipment Megatron/Botjheng awarded supply, delivery and installation of:

Cabling
Cable racking
Instrumentation
Transformers
Switchgear
Generators

SLIDE 11

26/01/2016 11 Contributors for the period

Zuikerbosch Water Treatment Works (in progress) South Africa Electrical and instrumentation Upgrades to waste water treatment plant Megatron awarded turnkey project to supply, delivery and install :

Cabling
Cable racking
Instrumentation
Transformers

Contributors for the period

Ndola Lime Recapitalisation Project (complete)

Zambia
upgrades to the Ndola Lime Mining
perations
Megatron awarded all electrical and

instrumentation works

SLIDE 12

26/01/2016 12 Contributors for the period

Energy Efficiency (complete)

Democratic Republic of Congo - Lubumbashi
63 MW saved by replacing 884340 lamps
8 months to complete
Local labour trained by Megatron
After successful completion we expect to replicate the scheme in Kinshasa,
Kolwezi and Likasi have approached Megatron to save energy in the various

towns

Contributors for the period

Co-Generation Solar and Generator Supply (completed Dec 2015) Democratic Republic of Congo – Kananga Phase 1 Megatron awarded design, supply, delivery and installation of:

3x 750kva Generators
750kW of Solar
Cabling

The project is complete, energised and inaugurated by the Governor of Kasai in January 2016.

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26/01/2016 13

Renewable Concentrated Solar (complete) South Africa – Upington KAXU (R32 million) and KHI sites Megatron awarded a turnkey projects for the electrical and instrumentation works including:

Cabling
Cable racking
Instrumentation
Mini-subs

Contributors for the period Contributors and prospects Infrastructure

SLIDE 14

26/01/2016 14 Contributors and prospects Infrastructure

Shilatembo Substation and Transmission Lines – Turnkey

Metelong Water Treatment plant Phase II
Power distribution Metering In Kananga Phase
Sicogi Housing Project
GCK Cement Plant – DRC

Contributors and prospects Infrastructure

Shilatembo Substation – Turnkey

Democratic Republic of Congo - Shilatembo
New substation 120kV , 5 Line bays and 1 Bus coupler
New Double Circuit Line 2x 120kV Line 22km’s
Re-conducting of line – Change from copper to aluminium 242km’s

Metolong Water Treatment Plant - Phase 4 Assisted operation and Maintenance

Lesotho
JV between CMC and Bothjeng
Training staff and operators.
Supply of chemicals and running of plant

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26/01/2016 15 Contributors and prospects Infrastructure

Distribution Power Metering in Kananga Phase II

Build own operate and transfer.
Democratic Republic of Congo – Kananga
Supply and install pre-paid meters

Contributors and prospects Infrastructure

Sicogi Housing Project

Ivory Coast.
This is a PPP with the State Housing Society for two housing schemes.

Megatron role is to Design Build and Transfer.

Housing Project in Grand Bassam

Luxury Development L ‘Oasis on 65 hectares

200 high end homes with an average of 500sqm
Clubhouse with recreational facilities including swimming pool, tennis courts

and communal gym

Secure gated development

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26/01/2016 16 Contributors and prospects Infrastructure

Medium development Les- Dunes

Development to be built on 55 Hectares
3000 Medium Sectional title houses
Club house facility
Outdoor Gyms
Running track
Park within the heart of the development
Commercial space
Primary and Secondary Schools

Contributors and prospects Infrastructure

GCK – DRC Democratic Republic of Congo – Likasi Megatron awarded design build:

2x 15 Mva Transformer Bays
Overhead line and T- OFF

SLIDE 17

26/01/2016 17 Possible threats

Spending power of oil dependent African economies
Reduction in diesel and HFO prices
Political instability

Opportunities

Growing energy demand
Co location in African cellular Telecommunications sites
SA Rand forex
Renewable build operate and transfer power projects
Off grid solutions

SLIDE 18

26/01/2016 18 Strategy

Continue to target opportunities in Sub-Saharan Africa excluding South

Africa

Projects denominated in foreign currency

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26/01/2016 19

Back up power generation

Load shedding from December 2014 to July 2015 fueled sales
Concentration on consumer products.

Electrical

Continued growth in market share
New innovative products

Contributors – May to October

Lowering of overhead costs OVHD

We have sold out all stock
Will re-enter if financially viable

Open View HD

SLIDE 20

26/01/2016 20 DTT Lamp For Life Corporate Electrical Contributors for the next six months

Contributors for the next six months

Order for satellite dish kits – over 400 000
We have started manufacturing and delivering - received first payment.
No invoices in figures reported today.
Signed the contract for the installation of product for

the migration.

Await an antenna order.

DTT

Supplying antennas for Multichoice digital migration .

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26/01/2016 21

Launched 2nd week December

R85 R70

Contributors for the next six months

Lamp For Life

Residential lighting range

Addressing mass market

R45

Contributors for the next six months

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26/01/2016 22

Contributors for the next 6 months

Corporate

Lighting - warehousing

Super Group warehouses and offices
Possible 16% increase by Eskom

shortens payback

Corporate

Lighting - retail

New customers Spar and PnP in Cape Town
Spar in Johannesburg and Port Elizabeth
Rage Stores
Direct indents to developers

Contributors for the next six months

SLIDE 23

26/01/2016 23 Corporate

Audio

45 stores in Mall of the South
8 stores New Alberton Mall
Placecol
OK Furniture
Panorottis
Spur
Superga
Maxis
Widman

Contributors for the next six months Contributors for the next 6 months

Corporate

Video

Sun City Nedbank Challenge
Baldwin Properties
C.D.P.
Caliber
Security and Fire
MET BCE
As Sure

SLIDE 24

26/01/2016 24 Electrical

Many competitors
Competitive offering
Stay at the for front of technology and style
Launched new packaging

Contributors for the next six months

Corporate

Solar

New kits developed for ease of use by installers

and electricians

Pre-wired solar kits

Contributors for the next six months

SLIDE 25

26/01/2016 25 Possible threats Exchange rate October 2014

R 11.00

To the US Dollar

October 2015 Today April 2015

R 12.00

To the US Dollar

R 13.80

To the US Dollar

R 16.50

To the US Dollar

Possible threats

Retailers under pressure
Increased indent program by retailers

April 2016

???????

To the US Dollar

25/01/2015

SLIDE 26

26/01/2016 26

Slowing down of satellite

Competition OVHD, Showmax and Netflix
Siyaya starting 1st half
DTT

Struggling consumer

Consumer debt still worrying
Possible interest rate hikes
Higher cost of food and all imported products

Possible threats Strategy

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26/01/2016 27

Further reduction in costs by consolidating retail distribution

Short medium term
Align the business to large retail requirements
Lower the cost of handling

Concentration on independents

Improve training
Expand product offering
Support small business

Strategy

Drive corporate sales

Drive corporate lighting
New sales approach implemented

Focus more on solar – residential

New kit made to address potential

market

Make solar easier to buy

Strategy

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26/01/2016 28

Increased point of presence through installer trade counters

Strategy

More involvement in connectivity WIFI/3G/LTE

Strategy

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26/01/2016 29

Concentrate on locally manufactured goods

Dishes
Brackets
Shelving
Security
LED lamps

Strategy Conclusion

Busy with turn around strategy
Lower costs
Better cash flow
Difficult trading conditions
Remain relevant to the market
Weak currency - Megatron concentration on Africa dollar contracts
Ellies focus on local manufacture
Remain relevant to the market

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26/01/2016 30

Group Interim Results Presentation for the six months ended 31 October 2015 Wayne Samson | Group CEO

Thank you for your attendance and participation

For any further Investor Relations Questions please contact: Wayne Samson Group CEO 011 490 3840 Lynne Bothma Keyter Rech Investor Solutions 011 087 351 3815

HOLDINGS LIMITED